Property Gets Better With Age
Property information firm CoreLogic has found more evidence to support the view that successful property investment is based on time in the market not timing the market.
In its latest Pain and Gain Property Report, CoreLogic found that 31 per cent of homes that resold in the March 2016 quarter had achieved more than double their previous purchase price, while 9.2 per cent sold at a loss.
While each property is different, with different investment performance, Core Logic identified a clear trend where the longer the owner had held a property, the more it had appreciated on average.
Across the combined capital cities, homes that sold at a loss over the quarter had been owned for an average of just 5.4 years compared to 10.1 years for homes that sold for a gain and a much greater 17.2 years for those homes which sold for more than double their previous purchase price.
This trend was replicated across non-capital city markets, where homes that sold at a loss had been held for just 6.8 years on average. Homes that sold at a gain had been held for 10.2 years on average, and those that sold for more than double their previous purchase price had been held for 18.1 years.
CoreLogic research analyst Cameron Kusher said the result led to one key conclusion about property investment.
“Property ownership, whether for investment or owner-occupier purposes, should be seen as a long-term investment,” Mr Kushner said.
According to the report, the average loss making property dropped by $66,073 in value, while for those that went up, the average gross profit was a far more substantial $239,855.
Another trend from the report was the clear underperformance of regional property compared to the state capitals.
Only 6.9% of capital city properties resold at a loss compared to 13.1% of regional properties.
Mr Kushner said areas affected by the end of the resources boom were the hardest hit.
“The trends in regional areas are shifting with the proportion of loss-making resales trending lower in areas linked to tourism and lifestyle,” Mr Kushner said.
“On the other hand, housing markets linked to the resources sector are generally seeing an elevated level of loss-making resales after housing market conditions in many of these locations have posted a sharp correction.”
About 5.8% of capital city house resales and 9.4% of unit resales were at a price lower than the previous purchase price, while 11.2% of combined regional market houses and 19.2% of units resold for less than their previous purchase price.
The proportion of loss-making resales over March 2016 quarter across each capital city was recorded at: 2.1% in Sydney, 5.5% in Melbourne, 7.7% in Brisbane, 9.3% in Adelaide, 16.3% in Perth, 10.2% in Hobart, 21.1% in Darwin and 9.8% in Canberra.